Saturday, June 30, 12 noon. The news from the European Union’s summit meeting surprised markets, which by Thursday afternoon had pretty much given up on anything positive coming out of the meeting. And no wonder they were surprised. Only a few days earlier Angela Merkel, Chancellor of Germany, the dominant country in the EU, said [...]

Saturday, June 30, 12 noon.

The news from the European Union’s summit meeting surprised markets, which by Thursday afternoon had pretty much given up on anything positive coming out of the meeting.

And no wonder they were surprised. Only a few days earlier Angela Merkel, Chancellor of Germany, the dominant country in the EU, said emphatically that some of the subsequently announced measures would not take place “as long as I am alive”, and she does seem to still be quite alive. Hard to believe that a politician flip-flopped?

The surprise news pushed all previous concerns about global economic slowdowns, recessions, bear markets, fiscal cliffs, earnings warnings, and the like to the back burner if not completely off the stove.

So what that the week’s economic reports were more of the same dismal news of the last three months; that Consumer Confidence in the U.S. fell again in June to a 6-month low, that the previous report of 1st quarter corporate profits rising $11.4 billion was revised to a decline of $6.8 billion (the biggest decline since during the financial meltdown in 2008). Or that globally, Japan’s industrial output plunged 3.1% in May, or that Moody’s moved on from the euro-zone banking crisis to cut the ratings of 8 banks in Brazil.

Also, in the final analysis stock prices are based on corporate earnings, or more accurately the outlook for earnings going forward.

And once the EU announcement was released the market didn’t even seem to notice the report from Thomson Reuters that 2nd quarter earnings warnings are the most negative in more than 10 years, since the 3rd quarter of 2001, in the midst of that recession. An average of 122 S&P 500 companies provide guidance, and as of yesterday, 94 S&P 500 companies have issued negative warnings versus only 26 raising guidance.

And it’s not just S&P 500 companies. Goldman Sachs reports that companies across a broad section of the economy have issued warnings, with their latest guidance 2% to 20% beneath Wall Street’s previous estimates.

But the big news and market-mover is the EU’s latest and most promising rescue effort yet for the euro, the euro-zone, and particularly Spain and Italy.

Friday’s market spikes produced interesting chart conditions.

It wasn’t just stock and bond markets that reacted in a big way to the EU announcement. Commodities surged up just as dramatically, if not more so.

Does that mean the EU’s latest actions to save the euro and contain the euro-zone debt crisis is expected to also quickly end the economic recessions in Europe, and economic slowdowns in Asia, the U.S., Brazil, etc., and have demand for commodities surging in a new period of strong economic growth?

Apparently, given the way the price of oil and other commodities spiked up yesterday.

But as shown in the next chart, it wasn’t a big move on the intermediate-term charts. So if yesterday’s spike was the beginning of a new bull market for commodities there’s probably time to wait a bit for more confirmation, to make sure it wasn’t just brought on by the oversold condition beneath the 30-week m.a., made more dramatic by a short squeeze on short-sellers.

Gold also spiked up yesterday along with commodities (and the decline in the U.S. dollar), spiking back up to $1,600 an ounce.

That could also be the beginning of a positive reversal for gold. But as always, we’ll just follow the signals of our indicators. And yesterday’s spike doesn’t even show as a blip on the intermediate-term chart, for the moment anyway.

We’ll reserve our latest on stock markets, and the implications of the 450 point upside reversal by the Dow from late Thursday afternoon to Friday’s close, for subscribers in the premium content area.

Other Voices.

The EU announcement seems to have caught everyone by surprise, so much so that there hasn’t been time for meaningful analysis. At least, the commentaries and opinions are quite few and far between so far.

Financial Times, editorial: ‘One Small Step for European Mankind’. “That all the significant euro member states moved towards tying their fates more inextricably together makes the threat of disintegration a bit more remote than just a few days ago. . . . Much work remains to be done. As for banking union, no doubt domestic political constituencies will balk when they realize what it entails. But the steps taken this week show that pessimism may be overdone. Perhaps it could one day be morning in Europe again.”

Financial Times, John Authers, The Long View column: ‘Spain and Italy defenses likely to be tested again’. “This summit sharply improves the chances of keeping the capital markets in check, but does little to deal with the longer-term problems. A logical outcome for markets would be a recovery for awhile, followed by another downturn.”

The Wall Street Journal. Heard on the Street column:‘Summit Gives Relief, Not Results.’“The euro-zone’s crisis response remains one of small steps, not decisive solutions. There is good news here. . . The attempt to break the links between sovereigns and banks by allowing the European Stability Mechanism to recapitalize banks directly is a welcome one for markets. . . But there are hitches too. The ESM will only be able to recapitalize banks directly after the euro-zone introduces a single bank supervisory body, a process that will take time. The European Council is being asked to look at proposals for it by the end of 2012.”

Barron’s, Michael Santoli: ‘A Summer to Celebrate?’.“In U.S. stocks, Friday’s 2.5% gain in the Standard & Poor’s 500 index to 1362 brought it quite close to the level where it sat the first week of July one year ago, when it traded as high as 1356. Of course, a year ago, the market also seemed to have survived a springtime gut check and sidestepped an imminent Euro-meltdown when Greek authorities seemed to forestall default.

As we now know, the market promptly took a nasty turn within weeks, thanks to the U.S. debt-ceiling impasse, Treasury downgrade threat, and another round of Euro-debt and slowdown fears.

So, does this symmetry doom the markets to another summer of disappointment and macroeconomic malaise? Based on the evidence at hand, no.

Most obviously, there will be no maddening game of Congressional chicken over the debt ceiling this summer and the Treasury’s credit has already been downgraded, to little tangible effect. Neither the coming election nor the subsequent "fiscal cliff" expiration of stimulus measures carries the kind of chaotic, short-term, mutually-assured-destruction implications as last summer’s flap.”

Subscribers to Street Smart Report: In addition to the charts and updates in the ‘premium content’ area of this morning’s blog, the new issue of the newsletter from Wednesday is in the subscribers’ area of theStreet Smart Report website.

Yesterday in the U.S. Market.

A big spike-up rally, with the Dow closing up 277 points. And volume picked up significantly, to 1.1 billion shares traded on the NYSE.

The Dow closed up 277 points, or 2.2%. The S&P 500 closed up 2.5%. The NYSE Composite closed up 2.7%. The Nasdaq closed up 3.0%. The Nasdaq 100 closed up 3.1%. The Russell 2000 closed up 2.9%. The DJ Transportation Avg. closed up 2.8%. The DJ Utilities Avg closed up 0.7%.

Gold surged up $48 an ounce to close at $1,597 an ounce.

Oil spiked up a huge $7.07 a barrel to $84.76 a barrel.

The U.S. dollar etf UUP closed down a huge 1.4%.

The U.S. Treasury bond etf TLT closed down 1.3%.

Yesterday in European Markets.

Eurozone markets also surged up yesterday in response to the EU actions. Not so much for London (The U.K. is a member of the EU but not the eurozone).

The London FTSE closed up 1.4%. The German DAX surged up 4.3%. And France’s CAC spiked up 4.8%.

Global markets for the week.

The big spike-up rally yesterday saved what was headed for a quite negative week. For instance, thanks to closing up 4.3% yesterday, the German DAX closed up 2.4% for the week, instead of down 1.9% which it was as of Thursday’s close. It was the same with other markets including in the U.S., where the Dow surged up 447 points, or 3.6%, from its low late Thursday afternoon to its close Friday, to give it a gain of 1.9% for the week.

THIS WEEK (June 29)

DJIA

12880

+ 1.9%

S&P 500

1362

+ 2.0%

NYSE

7801

+ 2.4%

NASDAQ

2935

+ 1.5%

NASD 100

2615

+ 1.2%

Russ 2000

798

+ 3.0%

DJTransprts

5209

+ 2.5%

DJ Utilities

481

+ 2.0%

XOI Oils

1,165

+ 4.5%

Gold bull.

1,597

+ 1.6%

GoldStcks

157

+ 0.8%

Canada

11596

+ 1.4%

London

5571

+ 1.1%

Germany

6416

+ 2.4%

France

3196

+ 3.4%

Hong Kong

19441

+ 2.3%

Japan

9006

+ 2.4%

Australia

4135

+ 1.0%

S. Korea

1854

+ 0.4%

India

17429

+ 2.7%

Indonesia

3995

+ 1.7%

Brazil

54354

- 2.0%

Mexico

40199

+ 2.9%

China

2330

- 1.6%

LAST WEEK (June 22)

DJIA

12640

- 1.0%

S&P 500

1335

- 0.5%

NYSE

7616

- 0.6%

NASDAQ

2892

+ 0.7%

NASD 100

2585

+ 0.5%

Russ 2000

775

+ 0.5%

DJTransprts

5083

- 0.2%

DJ Utilities

472

- 2.3%

XOI Oils

1,115

- 3.0%

Gold bull.

1,571

- 3.3%

GoldStcks

156

- 4.8%

Canada

11435

- 0.8%

London

5513

+ 0.6%

Germany

6263

+ 0.6%

France

3090

+ 0.1%

Hong Kong

18995

- 1.2%

Japan

8798

+ 2.7%

Australia

4093

- 0.3%

S. Korea

1847

- 0.6%

India

16972

+ 0.1%

Indonesia

3889

+ 1.9%

Brazil

55438

- 0.7%

Mexico

39071

+ 3.5%

China

2367

- 2.0%

PREVIOUS WEEK (June 15)

DJIA

12767

+ 1.7%

S&P 500

1342

+ 1.3%

NYSE

7663

+ 1.5%

NASDAQ

2872

+ 0.5%

NASD 100

2571

+ 0.5%

Russ 2000

771

+ 0.3%

DJTransprts

5091

+ 0.6%

DJ Utilities

483

+ 1.0%

XOI Oils

1,150

+ 2.2%

Gold bull.

1,624

+ 2.0%

GoldStcks

164

+ 1.2%

Canada

11524

+ 0.2%

London

5478

+ 0.8%

Germany

6229

+ 1.6%

France

3087

+ 1.2%

Hong Kong

19233

+ 3.9%

Japan

8569

+ 1.3%

Australia

4107

- 0.1%

S. Korea

1858

+ 1.2%

India

16948

+ 1.4%

Indonesia

3818

- 0.2%

Brazil

55844

+ 2.9%

Mexico

37751

+ 1.1%

China

2416

+ 1.1%

Premium Content Area.

For Street Smart Report subscribers only, used to provide additional info to that provided in the newsletter, mid-week reports, and hotlines.

To obtain access please click on the ‘Subscribe’ link. It will take you to an information page on subscribing to Street Smart Report, a subscription to which includes access to the premium content area of this Street Smart Post blog.

In the premium content area this morning: U.S. market signals and outlook.

Next week will be a holiday-shortened week, the U.S. market only open 3 1/2 days, closing early Tuesday, and all day Wednesday for Independence Day.

But there will be important potential market-moving economic reports, including the ISM Mfg Index, Construction Spending, Factory Orders, and on Friday the Labor Department’s Employment Report for June. To see the full list and times for each release click here, and look at the left side of the page it takes you to.

As subscribers know, for many years we have referred to the employment report as The Big One because of its history of so often coming in with a big surprise in one direction or the other, which in turn causes a one to three-day triple-digit move by the Dow in one direction or the other.

This past week’s reports were mostly more of the same dismal variety of the last several months, providing further evidence that the economic recovery is still stumbling. And that had the market down for the week until late afternoon Thursday when the EU news first arrived.

Subscribers to Street Smart Report: In addition to the charts and updates in the ‘premium content’ area of this morning’s blog, the new issue of the newsletter from Wednesday is in the subscribers’ area of theStreet Smart Report website.

I’ll be back with the next regular blog post on Tuesday morning at 9:25 a.m.

Non-subscribers:Did you think we are expensive? Just $25.95 a month on your credit card. Cancel at any time after 1st month. Is your portfolio not worth that? We believe we can help you not only make more profits, but just as importantly avoid losses, and at very reasonable cost!

Our portfolios were up an average of 9.4% last year, our Seasonal Timing Strategy up 15.8%, in a flat year (S&P 500 unchanged for year) when many, if not most, managers and funds were down for the year. We were on Hulbert’s Ten Best Newsletters of the Year list for the 2nd time in 4 years, and #4 Long-Term Market-Timer in Timer Digest’s rankings.

And we are off to a great start this year, both portfolios out-performing the market so far, and we moved up to #1 Long-Term Market-Timer in April in Timer Digest’s rankings.

This blog appears every Tuesday, Thursday, and Saturday morning and at occasional times in between! Follow it via the RSS feed or follow it in Twitter (the handle is @streetsmartpost) so you won’t miss any posts.